Coal Tattoo

The looming coal cleanup crisis


Photo by Vivian Stockman, Ohio Valley Environmental Coalition.

Earlier this week, The New York Times had the latest of the recent national stories to take a stab at explaining the impending crisis regarding the cleanup of decades of pollution problems related to coal mining. The Washington Post had its own version of this story a few months ago.

Here’s a couple of the “nut graphs” from the Times piece:

Regulators are wrangling with bankrupt coal companies to set aside enough money to clean up Appalachia’s polluted rivers and mountains so that taxpayers are not stuck with the $1 billion bill.

The regulators worry that coal companies will use the bankruptcy courts to pay off their debts to banks and hedge funds, while leaving behind some of their environmental cleanup obligations.

The industry asserts that its cleanup plans — which include turning defunct mines back into countryside — are comprehensive and well funded. But some officials say those plans could prove unrealistic and falter as demand for coal remains weak.

The Post summarized the situation in a similar way:

A worsening financial crisis for the nation’s biggest coal companies is sparking concerns that U.S. taxpayers could be stuck with hundreds of millions, if not billions, of dollars in cleanup costs across a landscape of shuttered mines stretching from Appalachia to the northern Plains.

Worries about huge liabilities associated with hundreds of polluted mine sites have mounted as Peabody Energy, the world’s largest publicly traded coal company, was forced to appeal to creditors for an extra 30 days to pay its debts. Two of the four other biggest U.S. coal companies have declared bankruptcy in the past six months.

Under a 1977 federal law, coal companies are required to clean up mining sites when they’re shut down. But the industry’s plummeting fortunes have raised questions about whether companies can fulfill their obligations to rehabilitate vast strip mines in Western states — many of which are on federally owned property — as well as mountaintop-removal mining sites in the East.

It’s great that these issues are getting national attention. But this attention is long overdue. And one thing that is a bit worrisome is that there is a tone in the stories that sometimes makes it seem like this all came out of nowhere — that no one possibly could have imagined this crisis.

That’s just not true.

Part of the problem is the focus in the coverage on the issue of “self bonding,” in which mining companies basically promise they have the money available for cleanups, rather than actually posting insurance bonds that would fund reclamation if they went belly up. The real issue in my mind is less self bonding, and more the simple nature of states being allowed to run permit programs based on bond “pools.” Rather than requiring full-cost bonds — surety of some sort to cover the actual projected reclamation costs — companies pay a per-acre bond that goes into a common pool. It’s no surprise to readers of this blog that the per-acre bonds never covered the actual reclamation costs, let alone long-term water treatment.

And for many, many — many — years, environmental and citizen groups like the West Virginia Highlands Conservancy have been preaching that the bond pools (like West Virginia’s Special Reclamation Fund) didn’t have enough money — and would literally collapse if there were a collection of serious coal company bankrupties.

We tried to explain this in a story about this issue (and the companion issue of underfunded coal company health-care and pension plans) in a story last August:

In West Virginia, state regulators have never forced mine operators to post bonds or otherwise obtain insurance that would cover the full cost of land reclamation or water treatment at their mines. Instead, operators post bonds in smaller amounts, or they “self bond” by showing regulators they are financially healthy.

A “bond pool” or “special reclamation fund,” which also includes money from a reclamation tax on all mine operators, is used by Department of Environmental Protection’s Office of Special Reclamation to clean up mine sites that are abandoned since passage of the 1977 federal strip-mining law. That bond pool itself has, for years, struggled with maintaining enough funds to pay to clean up mines left to the state’s supervision when companies go belly-up.

Moving forward, it’s going to take a lot of work from smart people to find ways out of this mess — but one thing that is important in solving this and so many other coalfield issues is being honest about how the problems came to be.